Connecting to the future

October 3, 2016

Conversations shine a spotlight on industry issues and trends.

By Steve Margaroni, P.E., ENV SP

What will the engineering industry look like in 2021? Every five years, Psomas develops a strategic plan to provide long-term guidance on operations, decision-making, and yearly activities. One of the first steps in creating the 2021 Strategic Plan was to seek guidance on industry and economic trends from clients, partners, and industry experts in the private and public sectors across the Western United States. The format for each of these interviews was essentially the same — open, honest, spontaneous, and uninhibited conversation. Information gleaned from these interviews provided valuable industry insight and will be paramount to the success of the firm’s new strategic plan.

Following is a capsule of the striking thoughts and ideas produced during these interviews, summarized into the most important trends and issues of concern in five prominent areas: societal, economic, technological, environmental, and political. These issues and trends will all be critical in shaping the long-term future of our industry.

Societal

No issues and trends were more pressing than those related to social and cultural values. Most prominent is the increasing preference for urbanization in our society. Within our industry, most notable is the increasing trend toward collaboration between the public and private sectors and organizational staffing challenges.

Higher-density, downtown living is a growing trend, and the ability to walk and use public transportation and Uber is on the rise. Millennials as well as Boomers are driving this trend. Millennials in particular want a more balanced life and seem to have a preference for a walkable urban environment. This trend should lead to more dense development instead of sprawl. It logically extends to greater demand for transit development.

Within our industry, collaboration between the public and private sector is becoming more essential. Consequently, we are seeing a shift from operating in silos to working in collaboration. Increasingly, public agencies and private contractors are working together as a team rather than as individual organizations to complete important public projects.

Many participants agreed that we are at a tipping point in terms of succession planning in our organizations. Pending retirements are on the horizon, often with no successors in line. As a result, the loss of institutional knowledge is a major concern. A common refrain is the need for training/mentoring programs.

This problem is compounded as staffing challenges deepen. There is a continued war on talent, with high turnover. Moreover, recruitments are not generating an adequate level of technically qualified staff. Engaging Millennials is a common challenge. There is greater turnover in younger staff and it is difficult to keep them interested and challenged.

Economic

Economic issues were a close second to societal issues in terms of level of concern. Inadequate funding is making it difficult to commit to long-term projects. The need for additional state and federal revenue sources was top-of-mind, especially with regard to transportation funding. There seems to be a consensus that the Highway Trust Fund mechanism is completely broken and not enough taxes can be raised to fill that gap.

Compounding the problem, infrastructure funding was ignored during the recession. Today, there are no long-term plans or adequate funding to meet the nation’s backlog of infrastructure needs. The feeling is that our politicians are backing social programs and not addressing infrastructure needs.
Many believe that alternative delivery systems are the solution to ongoing project funding challenges. While various alternative delivery systems have been proposed over the years, agencies and owners are still looking for the ideal project delivery method and a solution to the perpetual funding problems.

While growth has returned, many are concerned about the economy going forward. This includes the trickle down of the oil and gas bust, uncertainties about the GDP, and concerns about another potential market crash.

And finally, private companies are feeling the pressure of competition, including many developers and engineering firms. Consolidation in the A/E industry continues to occur with mega firms, under pressure to hit stock prices, chasing projects of all sizes — even the smaller ones.

Technology

Technology was mentioned most often in relation to transportation. From shared mobility, including Uber/Lyft, to driverless cars, change is ahead. The question is, how fast will it occur? Expectations are that there will be a dramatic change from dependence on design and construction to maximizing mobility through technology. High-speed technology changes are accelerating with innovation and crowd sourcing of data (i.e., WAZE, traffic management systems, etc.). Connected vehicles and traffic management may reduce the need for additional infrastructure capacity.

The ability to manage big data and use analytics to draw insights will become even more important in many aspects of business and our lives. Maximizing the value that can be pulled out of “big data” paired with the speed of technology changes provides many future possibilities.

Many see technology as helping to make many aspects of our lives and business more efficient, including automating permits, fixing congestion, addressing staff shortages, and smart infrastructure.

And finally, the Internet and development of apps for most everything continues to drive down the need for brick-and-mortar locations.

Environmental

From mounting regulations to water shortages in the West to climate change, environmental concerns continue to be ever present. Government bureaucracy and increased environmental regulations continue to impact efficient project delivery. Many agencies are dealing with unfunded mandates, slow approvals, and more audits. Government regulations will continue to drive up costs and reduce the number of projects/programs that can be completed and owners can afford.

Water shortages in the Western U.S. are providing challenges but also opportunities. Water opportunities are on the rise as a result of deferred maintenance and an increasing need for conservation and reuse/recycle programs. The 20th Century was an era when infrastructure design and operations were key to the success of all water agencies. In the 21st Century, sustainability will be the key to success.

There is an increased focus on impacts associated with climate change. Greenhouse gas regulations are increasing and there are concerns about the impacts associated with extended periods of severe weather. Building climate resilience into design and project construction has become a major goal. The key focus is to tackle the vulnerability to climate change by addressing comprehensive planning, financial stability, disaster recovery, and system redundancies.

The renewable energy market received a boost in 2015 when Congress extended the income tax credit for renewable energy systems through 2023. Solar, wind, electric car adoption, net-zero buildings, and energy storage were all cited.

Political

Today’s political environment brings uncertainty. This includes the surprising presidential campaign as well as the lack of leadership to change the current system.

This election campaign has thrown a light on how unpredictable the future is when it comes to elections and the ballot box. From the Donald Trump and Bernie Sanders phenomena and the “out of control” California ballot initiatives to needing voter approval to build private developments, the power of elections can have significant impacts on our industry.

Government bureaucracies are slow to change and politicians are more focused on social issues. There is a lack of leadership to get things done that would benefit the majority of people, such as large infrastructure projects. In particular, there doesn’t appear to be any political will to address transportation funding needs. Alternative funding sources are necessary because the gas tax is not a sustainable solution.

Shining a spotlight on these important issues and trends in our industry — and in society at large — can provide valuable insight as companies engage in planning to meet both the opportunities and challenges ahead.

Steve Margaroni, P.E., ENV SP, is Psomas’ chief development officer, with a focus on growing the company (www.psomas.com).